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\begin{abstract}
  This thesis studies technological progress in the energy sector and
  the transition path from fossil fuels to renewable energy, with a
  particular emphasis on the consequences to the whole
  economy. Currently, there is an active discussion regarding
  subsidizing renewable energy sources, which are often portrayed as
  the sole future source of energy and the driver of significant
  employment and economic growth. However, innovation in the fossil
  fuel sector and its continuing development can also be a game
  changer and should not be ignored.

  In the first chapter, we use a dynamic general equilibrium model
  with endogenous technological progress in energy production to study
  the optimal transition from fossil fuels to renewable energy in a
  neoclassical growth economy. We emphasize the importance of modeling
  technology innovation in the fossil fuel sector, as well as in the
  renewable energy industry.  Advancements in the development of shale
  oil and gas increase the supply of fossil fuel. This implies that
  the ``parity cost target'' for renewables is a moving one.  We
  believe that this important observation is often neglected in policy
  discussions. Our quantitative analysis finds that these advancements
  allow fossil fuels to remain competitive for a longer period of
  time.

  While technological breakthroughs in the fossil fuel sector have
  postponed the full transition to renewable energy, they have also
  created many jobs and stimulated local economies. In the third
  chapter, we use an econometric analysis to compare job creation in
  the shale gas and oil sectors with that in the wind power sector in
  Texas. The results show that shale development and well drilling
  activities have brought strong employment and wage growth to Texas,
  while the impact of wind industry development on employment and
  wages statewide has been either not statistically significant or
  quite small.

  The first and third chapters question the current enthusiasm in
  policy circles for only focusing on alternative energy. Chapter 2
  provides some theoretical support for subsidizing renewable energy
  development. Here we develop a decentralized version of the model in
  Chapter 1 and allow for technological externalities. We analyze the
  efficiency of the competitive equilibrium solution and discuss in
  particular different scenarios whereby externalities can result in
  an inefficient outcome. We show that the decentralized economy with
  externalities leads to under-investment in R\&D, lower investment
  and consumption, and delayed transition to the renewable
  economy. This may provide an opportunity for government action to
  improve private sector outcomes. % Both
  % taxing fossil fuels and subsidizing renewable energy could alleviate
  % the problem and accelerate the rate of adoption of renewable energy
  % technology.

  \end{abstract}


% , oil
  % sands production in Canada, the pre-salt discoveries off Brazil and
  % deep water exploration and production
 %  At the same time, innovations in internal combustion
  % engine or gas-fired power generation technologies, for example, also
  % enhance the competitiveness of fossil fuels.
